U.S. Department of Education officials warned Georgia leaders this week that the state could lose $9.9 million from Georgia’s $400 million Race to the Top grant.

At issue is a teacher evaluation program that weighs student performance with merit pay. In a seven-page letter sent late Tuesday to Gov. Nathan Deal, the U.S. DOE said Georgia, “indicated that it will no longer implement one of the goals and commitments related to performance-based compensation system, as described in its approved application.”

The U.S. DOE, in the letter signed by Ann Whalen, director of policy and program implementation, also said Georgia intends to provide one-time bonuses in the 2013-14 school year to teachers and leaders for reducing the achievement gap, and one-time bonuses the following school year based on the evaluation system.

That’s a “change of scope” that “significantly decreases or eliminates reform” in that area, the letter said.

State School Superintendent John Barge said Georgia is not ready to implement a statewide merit pay system, and educators across the state said they needed another year to work on implementing performance measures and personnel decisions in subjects where there’s not a standardized test.

Barge added that the state was on track for a teacher and leaders effectiveness evaluation system in 2014-15.

“We will continue to work with federal officials to develop a plan regarding this issue,” Barge said. “But it is critical that we establish an accurate measurement tool for educator performance before we ever consider linking it to merit bonuses for Georgia’s teachers.

In Race to the Top, which began in 2009, states compete for grant funding based on education reform plans that show high school graduates are ready for college or a job, and ways to improve poor-performing schools.